MaRS Library Case study: Recruiting—Hiring your first salesperson
Hiring the first salesperson can present a daunting challenge for entrepreneurs who run technology-based companies. Often, entrepreneurs have engineering or scientific backgrounds and little experience making sales. Knowing what kind of salesperson to hire and how to do it is goes a very long way.
The following is a fictional account of two entrepreneurs, Melissa and Gordon:
Melissa, the busy founder of a technology startup, began to realize that in order to grow her company, she would have to hire a dedicated salesperson. Gordon, the founder of another technology startup, had recently come to the same conclusion. Both founders had made some early sales and developed relationships with a few customers. Aside from these initial sales, however, neither company had any revenues. Melissa and Gordon each faced the problem of finding a salesperson who could transform their companies into growing, revenue-generating businesses.
Melissa turned to other entrepreneur friends in her network to determine what to look for when hiring her first salesperson. She learned that the best fit for her company would be someone who had experience building sales at other successful startups.
Gordon reached out to his alumni network, eventually contacting one of his former classmates working as an account executive at a multinational internet advertising company. Ben had been working at the multinational since he graduated four years earlier and was comfortable managing sales relationships with large corporate customers.
Melissa trolled technology startup events and online entrepreneur networks. She spoke to her current customers, and discussed her needs with everyone on her advisory board. The message she communicated was that she was looking for a technology sales powerhouse with experience driving sales at start-up companies. She made it clear that she was looking for an experienced salesperson interested in taking on an exciting and potentially lucrative new challenge. When resumes began to appear, Melissa scanned through them looking for a relevant start-up sales background, as well as data detailing previous successes.
Meanwhile, Gordon and Ben met for coffee. They reminisced about their good times together at school and spoke about the exciting technology that Gordon’s company had developed. Ben admitted that he was tired of working at the multinational and that he thought Gordon’s company had real potential. Ben mentioned that with the right sales system in place, Gordon’s company could really expand. Gordon thought to himself that Ben was really “getting” his company and that he would enjoy working with such a good friend. As a next step, Gordon asked Ben to think about what he would do if he were to join his company as sales director. Ben did some research and drew on his experience at the multinational to draft a plan for managing the sales operations at Gordon’s company. Gordon was impressed with the big-picture strategic planning Ben had prepared and how well Ben intended to make use of the sales systems he had learned from his work at the multinational.
Having sorted through several resumes, Melissa chose five candidates. She called each one, spoke about her company and her product, and asked each candidate to develop a rough sales plan for the next two years. Melissa intended to go over each sales plan and invite those candidates with the best proposals to come in for an interview. When she received the sales plans, she set aside those that failed to lay out the number of sales calls that the candidate proposed to make each day. On the advice of her entrepreneur friends, Melissa looked for someone who was capable of pursuing and closing sales from day one. Though almost all the sales plans she received had some valuable insights about how best to grow sales at her company, Melissa invited the two strongest overall candidates in for interviews. Both were comfortable with a salary that was heavily weighted toward commission-based pay and both had experience generating sales revenues where none had existed before. Melissa chose to hire the slightly more experienced candidate, because she knew that she would eventually need someone able to manage a sales team and teach newcomers the ropes.
Gordon hired Ben and gave him the title of VP of Business Development. Coming from a less technology-oriented company, Ben felt it was essential that he spend weeks learning the details of his new employers’ products, doing market research and holding strategy sessions with Gordon. Since Ben had insisted on a fixed salary rather than one largely based on commission, Gordon’s company took on an expense it could not support without strong sales. The more time Ben spent on strategizing and studying market trends, the more Gordon’s company suffered. Since Gordon and Ben were friends, Gordon couldn’t bring himself to comment on Ben’s failure to initiate actual sales. Finally, Gordon had to let Ben go and resumed the company’s sales activity himself. He no longer had funds to pay for a new hire, and while he was busy making sales calls, his company’s other operations floundered.
With the addition of a highly-motivated and experienced salesperson, Melissa’s company flourished. The new salesperson made use of an extensive list of personal contacts to secure several sales with marquee customers, while at the same time getting support from Melissa and her engineers when technical questions arose that she could not yet answer. Melissa had her hands full managing the company’s spectacular growth.
The different experiences of Melissa and Gordon underscore key points:
- The first salesperson you hire should have experience creating sales from scratch at another startup. Most valuable are those candidates who can point to past experience building revenues successfully from zero up. They should refer to these accomplishments in their resumes and offer references as corroboration.
- When recruiting your first salesperson, leverage networks close to your own business. Angel investor networks, networks of fellow entrepreneurs, current or retired serial entrepreneurs, and those on your advisory board will all provide good leads for finding strong candidates.
- A sign of an accomplished salesperson is a willingness to be compensated largely though sales commission. People who know they are adept at sales will have confidence they can earn more through commission than through a fixed salary.
- Good salespeople are happy working toward sales targets and feel comfortable reporting on performance measurement metrics such as the number of sales calls initiated, leads generated and deals closed, as well as the revenue generated per sale.
- A skilled salesperson doesn’t have to be an expert on your technology before they begin making sales calls. If someone plans to spend months educating themselves on your offering, it’s a sign that they lack the ingredients necessary to survive in a startup.
- Good salespeople make great first impressions. They’re salespeople after all. The best ones will seek introductions through people you know and respect, they will have done very thorough initial research on your company, and they will start building relationships with your staff the moment they walk through the door.
- Sales metrics and the sales process for early-stage tech startups.
- Defining, building and maintaining a corporate culture.
- Employee recruitment: Using your professional network to source candidates.
- Offer of employment and employment contracts: What startups need to know.
- Career planning and development: Meeting business and employee needs.